Shopify Payments – No More Fumbling with Payment Gateways

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What is Shopify Payments, and is it worth your while?

Shopify Payments is Shopify’s built-in payment processor, meaning it eliminates the need for a third-party payment solution. You can still use third-party processors like PayPal and Stripe on your Shopify site, but Shopify Payments gives you the option to bypass all of the different account activations and dashboards that come with those other processors.

Shopify Payments is convenient for customers, too – you can enable local currencies and tons of popular payment methods, from credit cards to Apple Pay. The convenience of Shopify Payments is one of the reasons why Shopify is one of our top-rated ecommerce platforms.

But how does Shopify Payments really compare to veterans like PayPal? We’ll cover all of the finer details below to help you decide if this is the right payment processor for your site. First, a quick overview:

Shopify Payments Pros Shopify Payments Cons
No commission fees (Shopify takes up to 2% commission when you use other payment processors) Unavailable in some countries
Sign up is quick and easy Chargeback fees are only waived if the dispute is resolved in your favor
You can see all of your payout information in your Shopify admin Some businesses are restricted depending on what products you sell

Want to know more about Shopify before we start?

How Much Does Shopify Payments Cost?

Shopify Payments Pricing Overview

The only cost associated with Shopify Payments is a transaction fee that differs slightly depending on which Shopify plan you use to build your site. The highest fee is 2.9% + 30¢ per transaction on the Shopify Basic plan. It’s a pretty average rate with no extra fees.

Typically, when you sign up for Shopify’s cheapest plan, you’ll have to pay 2% commission on each sale, and even the priciest plan still charges 0.5% commission. When you use Shopify Payments, those commission fees are waived – even if your customers choose a different payment processor at checkout. Just by making the Shopify Payments method an option, you’ll be saving money.

So, to sum up, you’ll still have to pay a transaction fee, but Shopify won’t impose any commissions on top of the transaction fees the way it would with PayPal, Stripe, and other third-party processors – unless you live in Sweden, Austria, or Belgium, in which case additional costs apply.

As we mentioned, transaction fees are slightly different depending on which paid Shopify plan you use:

Plan Shopify Basic ($29/month) Shopify ($79/month) Advanced Shopify ($299/month)
Shopify Payments online transaction fees 2.9% + 30¢ per transaction 2.6% + 30¢ per transaction 2.4% + 30¢ per transaction
Shopify Payments in-person transaction fees 2.7% + 0¢ per transaction 2.5% + 0¢ per transaction 2.4% + 0¢ per transaction

Is Shopify Payments Good Value For Money?

Yes. Most payment processors charge transaction fees of around 2-4% the value of each purchase, so Shopify Payments is pretty standard in terms of price. What makes it great value is that there are no extra commissions or hidden fees to complicate things or hike up the price.

Shopify Payments also rounds up prices when converting to different currencies, so you won’t end up losing funds if you sell to overseas customers.

Shopify Payments vs Competitors

You don’t have to use Shopify Payments just because you run your online store through Shopify. In fact, Shopify integrates with over 100 other payment processors, including giants like PayPal and Stripe. So, what are the benefits and drawbacks of each payment processor?

We’ve compared Shopify Payments with its most popular alternatives below, using the highest transaction fee that each processor imposes:

*A point of sale (POS) system is software that can process payment transactions at the point of purchase, such as a card reader or a smartphone app.

Processor Fees (US) Fees (International) Selling in multiple currencies? Discounts for nonprofits? POS* payments supported?
Shopify Payments 2.9% + 30¢ per transaction +1.5-2%, depending on store location
PayPal 2.9% + 30¢ per transaction 4.4% + fixed fee based on currency
Stripe 2.9% + 30¢ per transaction +1%

The biggest benefits of Shopify Payments happen on your end as the seller. Shopify Payments beats the competition because…

1. You Can Track Your Money In Real Time

You can track your sales and revenue with any payment processor, but Shopify Payments displays it all directly in your Shopify dashboard – so no more remembering multiple passwords and clicking around unfamiliar third-party websites just to access your financial info.

shopify payments finance dashboard
Shopify’s dashboard makes keeping track of finances as straightforward as possible.

2. You’ll Have Support For Chargeback Recoveries

As a merchant, chargebacks are pretty much an accepted risk that you’ll have to deal with from time to time (they happen when someone makes a purchase from you, then files a complaint with their credit card company to try to cancel the transaction).

Processors like PayPal often take the buyer’s side in chargeback disputes, and you’ll have to provide additional proof about the transaction if you want help. But Shopify Payments offers more support, and you can respond to chargebacks directly from your Shopify dashboard. Shopify will even provide custom-generated responses for each order, using shipping and customer details from the transaction.

shopify payments chargeback handling
Shopify Payments offers support when dealing with chargebacks, and makes it easy to manage each one.

That said, it’s important to note when a customer’s bank sends you a chargeback, they also charge you a processing fee that varies by country – it’s a standard charge of $15 in the US, for example. Shopify will only pay this fee for you if the chargeback is resolved in your favor. If the chargeback is resolved in the customer’s favor, or if you choose not to dispute it, then you’ll have to pay the $15 yourself.

3. Your Customers Won’t Be Redirected At Checkout

Adding any more steps than necessary to your checkout process can be bad for conversion rates. In 2021, 18% of US online shoppers have abandoned an order purely because the checkout process was too long or complicated. The advantage of Shopify Payments is that it simplifies the checkout process for customers, rather than adding even more steps.

What About the Weaknesses?

It’s safe to say that Shopify Payments has its fair share of advantages. But processors like PayPal and Stripe are also popular for a reason, and they do manage to top Shopify Payments in some areas.

Stripe offers even stronger chargeback protection than Shopify Payments. If you’re willing to pay an additional 0.4% per transaction, then Stripe will cover any disputed amount of money and waive any dispute fees – with no evidence submission required on your part!

To qualify for PayPal’s Seller Protection, on the other hand, the goods you sell must be tangible – which means that services and digital goods aren’t covered. You’ll also have to provide a lot of documentation about the disputed purchase, which can be a time-consuming process.

PayPal’s greatest strength is its popularity – in 2020, 71% of ecommerce merchants offered a PayPal buy button on their website, meaning it’s a brand that customers know and trust. But that’s what’s so great about Shopify Payments – you can reap the benefits listed above, and offer PayPal as an additional option.

shopify

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What Are the Limitations?

Currently, Shopify Payments is only available in certain countries, including:

  • United States
  • Canada
  • United Kingdom
  • Singapore
  • Australia
  • Ireland

If Shopify Payments isn’t available in your country, then you can still choose from the many other payment gateways that Shopify supports.

Shopify also prohibits certain types of businesses from using Shopify Payments. The list differs slightly depending on what country you’re in – for example, the following types of businesses cannot use Shopify Payments in the US:

  • Investment and credit services, including securities brokers, mortgage consulting services, and real estate opportunities
  • Money and legal services, including check cashing, wire transfers, currency exchanges, and bail bonds
  • Virtual currency, including Bitcoin, digital wallets, and cryptocurrency mining equipment

How Do I Set Up Shopify Payments?

Once you have a Shopify account, you can click on the “Settings” tab in the lower left-hand corner of your dashboard, and then click on “Payments.”

how to set up shopify payments
Click on "Payments" in your Shopify dashboard to kickstart the Shopify Payments setup process.

From there, you’ll just have to provide some basic info about your business, starting with the business type. You’ll be able to classify your business as one of the following:

  • Individual/sole proprietor/single-member LLC
  • Corporation
  • LLC
  • Partnership
  • Nonprofit

Then, you’ll want to provide your Employer Identification Number (if in the US) and business address.

setting up business information
Make sure you enter your business details in this section

Next up are your personal details:

entering personal details
In this step, you need to enter your personal details such as your name and date of birth
Top Tip: Note that the first and last names you provide must match the information on your government-issued ID. If you enter your store name instead, then your account won’t be verified if Shopify ever requests identification information from you later.

Next you’ll be asked to add in a short description of the products or services your business provides, and to include your name and phone number the way you’d like them to appear on customers’ bank statements.

In the final step, you’ll provide your banking information…

entering bank information
Finally, enter your banking information so that you can get paid!

…And voilà, you’re ready to start accepting payments!

Top Tip: Setting up Shopify Payments is remarkably easy, but that doesn’t make it any less important! Make sure you input all of your business details and banking information within 21 days of your first sale – otherwise, payments will automatically be refunded to the buyer!

Integration With Shopify POS

A point of sale (POS) system is technology that processes payment transactions at the point of purchase. In other words, you can manage both offline and online sales all in the same place.

Shopify offers its own POS system in the form of an iPad app that lets merchants make sales in-store. As you can imagine, it’s not the most in-demand item of 2021, but it’s a great tool that you can even sync with your digital Shopify store to track all of your clients’ orders in one place.

shopify pos tool
Shopify Point of Sale integrates easily with Shopify Payments and syncs with your online store

Shopify offering its own POS system, which integrates easily with Shopify Payments, means it’s never been easier to accept and track payments both in-store and online. Shopify is ahead of the competition here – PayPal, for example, doesn’t have its own POS system, so you’d have to employ another third-party to sell in-person.

Shopify’s in-person transaction fees range from 2.4-2.7% of the sale price, depending on which Shopify plan you use for your website. You can install the Shopify POS app on your iPhone, iPad, or Android, and login with your Shopify account details. Your digital Shopify store will automatically synchronize with Shopify POS.

Shopify Payments Review: Summary

In short, Shopify Payments is a convenient tool for both you and your customers. You’ll get to manage all of your revenue from your Shopify dashboard, and your customers won’t have to slog through third-party checkout processes.

As with any payment processing tool, we recommend you read the full terms of service before making a final decision. But if you value easy setup, straightforward management, and POS integration, then Shopify Payments won’t disappoint.

shopify

Is Shopify Payments Right For You?

Shopify Payments isn’t right for everyone, but it provides smooth integrations and lower fees, which make payments even easier.

FAQs

Yes. Businesses in the US, for example, can accept Visa, Mastercard, American Express, JCB, Discover, and Diners Club debit and credit cards.

If your customer raises a chargeback dispute but then decides that it was a mistake, it’s possible to reverse the chargeback – but only the customer can do so via their bank.

Refunds take approximately 5-10 business days. Shopify will submit the refund to your customer’s bank immediately, but the bank must then process the refund and apply it to the customer’s account, which is why the timing varies.

Shopify Payments is as secure as Shopify’s website building platform – so in other words, very secure. Every Shopify store is PCI compliant by default, which means your customers’ payment card information is protected and networks are regularly monitored to prevent any breaches.

About Jeremy

Jeremy

Maybe just like you, at first we didn't have a darn clue about how to build a website, nevermind write half a line of code if our life depended on it! We wanted to build a website to start a side business, and felt overwhelmed, confused & scared about how to actually do it, which builder to use, and making wrong decisions. After years of trials & errors using different website builders, we're here to share our experiences with you.

61 comments

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  • Carol
    Hi there, Is there someone who can help me set up my payment gateway pls? I’m a digital nomad. I live everywhere and no where. I don’t have a set address. The bank Acct I use is not American as I’m travelling around a lot. I feel like my website is limited for my customers Bc I’m not based anywhere concrete.
    1 reply
    • Lucy Carney
      Hi Carol, At first look I would say it's going to be difficult setting up Shopify Payments without a set address, as you have to enter one during the setup process. Unfortunately we can't physically help you set up a payment gateway. I'd recommend reaching out to Shopify's help and support if you haven't already, as I've seen other people asking this and it may be something they've advised others on before! Best of luck, Lucy
  • Alex
    While we are not selling products which not comply with Shopify Payments, they suddenly shut down our payment gateway as they are requiring a physical presence in the eligible country. And this while we have a company incorporated since 15 years in that country and with a bank account also located in the country. Due to the nature of our business we don’t need a physical office and only had a virtual office, which is not sufficient for them. It means that Shopify payments is not suitable for digital nomads/expats even though they have a legal structure in an approved country, which is really a shame when it comes to online business. Has anyone faced the same issue and knows a work around?
    1 reply
    • Lucy Carney
      Hi Alex, I'm sorry to hear about your struggles with Shopify Payments! This is definitely an issue I've read about others having, so you're not alone. Sadly I don't currently have a workaround to offer, but would always recommend getting in touch directly with Shopify to flag the issue. You're right it is a shame that digital nomads face such frustrations, I hope you find a way to make it work. Many thanks for sharing your experiences here with us, I'm sure other readers will find it useful! Best, Lucy
  • Marilyn
    Hi, thank you for this comparison. I was searching for alternatives to Etsy and this came up. Since I was previously thinking of starting with a Weekly website this article was perfect. The question I have is for all these platforms. Does the vendor (me) have a way to obtain and collect user and buyer contact info from these services? I gratefully await your reply.????
    1 reply
    • Lucy Carney
      Hi Marilyn, Thanks for your question! When a customer places an order with your Shopify store, their name and information are added to your customer list. You can email them using this information, or create customer groups to help manage your marketing and orders. I hope this helps! Best, Lucy
  • Michael
    A very helpful and informative review. Thanks
  • Kelly
    I live in the US Virgin Islands, owned by USA, however, we are never treated equally. It is a shame. Shopify Payments is allowed in the USA AND PUERTO RICO, yet NOT the US VIRGIN ISLANDS. Please revise this error. We are owned by the USA and should be treated equally.
    1 reply
    • Lucy Carney
      Hi Kelly, I'm very sorry about your frustrations! We're not part of Shopify Payments in any way, we're an independent review site, so sadly I can't change this for you. I recommend taking it up with Shopify to see if you can get them to revise this. As you say, Shopify Payments is currently supported in the US, but is not available in any US territories excpet Puerto Rico. Thanks for sharing your experience, and best of luck! Lucy
  • Patrycja
    It is great that Shopify has a payment gateway already integrated into its core. However, as for now I am using a third party payment gateway Cardinity and had no problems so far. Certainly, you have to spend some time on integration, but it paid off for my business. It's a pity that Cardinity is available only for European businesses.
  • Raja singh
    You have discussed an interesting topic that everybody should know. Very well explained with examples.
  • Lisa
    Thanks for this. Can you say if the customer's payment details are stored by Shopify centrally? I really want a solution that I don't see and retain the customers financial information because if I do, I then need to have many more procedures in place to take care of it. Can you expand on this area?
    1 reply
    • Lucy Carney
      Hi Lisa, Thanks for your comment and your question, I understand your concerns. When you use Shopify Pay customers can save their card, shipping, and billing information to make checkout faster. This is important for online stores as it keeps customers happy! But more importantly, these details are stored on Shopify's PCI (Payment Card Industry) compliant servers. These details are only shared with you when that customer places an order. So you are not storing payment details yourself and shouldn't need any extra procedures or documents to safely handle transactions. You can also choose which payment methods to enable on your website (for example credit cards, PayPal, Amazon Pay, Apple Pay etc). You can read more about payments on Shopify, more about Shopify Payments and Shopify Pay in their help centre, which I have linked to for you to look at. I hope this helps, and best of luck with your online store! Thanks for reading, Lucy
  • babu
    Your information is really helpful for my business. Thanks for sharing this post.
    1 reply
    • Natasha Willett
      Dear Babu, Welcome to the community. Really pleased to hear that you enjoyed the article. Cheers, Natasha.
  • Vijay
    Is Shopify good for digital download products store? How does it compare with, say FastSpring? thanks.
    1 reply